Committee Supports 2-yard Arrangement

The committee, adopting a compromise plan crafted by Sen. John Warner, agreed to give Electric Boat of Groton, Conn., a third Seawolf submarine next year and the first of a new series of attack submarines in 1998, as the Clinton administration had requested.

But the committee bucked the administration's plan to have Electric Boat build all future subs by voting to allow Newport News to build the second sub in the new series in 1999.

The two yards would compete for the remainder of the new attack submarines after 2000. The Navy now plans to build 30 of the subs over the 20 years for $50 billion to $60 billion.

"This is the most satisfying day of my 17 years in the Senate," Warner said.

"We were headed into an absolutely bloody battle with no certainty of who was going to survive," he said. "The secretary of defense knew it, the secretary of the Navy knew it, and I knew it.

The full Senate will take up the committee's plan next month. If approved, it would have to be reconciled with a House defense bill that seeks to cancel the third Seawolf.

The Senate's plan would require spending $2.3 billion on subs next year, $100 million more than the administration had requested. The funding includes $1.5 billion to finish the Seawolf and an $814 million downpayment on the two attack submarines.

Newport News would get $100 million to begin planning and purchasing for its sub and another $10 million to help it adapt the design Electric Boat has been crafting for the new attack subs.

The committee also authorized spending $802 million in 1997 on the attack subs, with $502 million of that going to Newport News.

"This is more expensive for the taxpayer," Sen. Charles Robb, an Armed Services Committee member, said. "But it's not as expensive as having Electric Boat build all of these subs."

At a time when reducing the deficit is a top congressional priority, the higher-priced sub policy "leaves us vulnerable down the road, no question about it," Robb said. But "it's probably the only way we could resolve it just given the dynamics of both the policy and the politics."

Both Newport News and Electric Boat were pleased but cautious following the committee's action.

The vote "affirms the need to keep Newport News in the running for the new attack submarine," Newport News spokesman Mike Hatfield said. "We're encouraged by that. But there are a lot of details to be revealed."

Electric Boat, which needed the Seawolf just to keep its yard open, is "encouraged that it would fully fund the third Seawolf and the first new attack submarine," spokesman Neil Ruenzel said. "It's a positive first step. There are more steps to go."

Topping the list of concerns of both yards is how a future competition would be run. Both are wary that the other would be given an advantage that would help it win all future work and force the other out of the business.

Electric Boat has been designing the new subs with the Navy and has adapted those designs to its own construction methods. Newport News, on the other hand, is a larger, more diverse yard that many believe can undercut Electric Boat in a lowest-bidder-take-all competition.

Warner, a former Navy secretary who earlier this year had proposed canceling the third Seawolf, said he had crafted the compromise after becoming convinced that the world threat - particularly advancements made by Russian subs - warranted keeping two nuclear shipyards open. Any additional costs, he said, could be offset by price-shaving competitions in the future.

The Senate committee's defense authorization bill, which includes the sub policy, would authorize spending $263.7 billion next year, or about $6 billion more than the administration had sought. The House authorized $267 billion. This year's defense budget is $263 billion.